IBM offers cut-price patent service

IBM has announced a new program that will provide access to all its 40,000 patents to young companies in its venture capital program for a dramatically reduced rate.

Companies with annual revenue of less than $10 million can pay $25,000 to gain access to IBMs entire patent portfolio for three years, says Deborah Magid, director of strategic alliances with IBMs Venture Capital Group.

In order to qualify for the program, however, these start-ups must list among their investors one of IBMs VC partner firms - Walden International, Accel Partners, 3i, Darby Overseas Investments, and around 100 others.

"We felt that a lot of the IT practices are really something of an obstacle to start-ups, especially when companies are in the formative state. We thought this was one place that [intellectual property] should be more open than it is today," Magid says. The deal comes with no strings attached. Start-ups that participate in the patent program are not obliged to develop products with the patents, although they could create products that compete with IBM if they so chose, she said.

IBM is hoping however that small companies will develop software that work with its infrastructure offerings.

Start-up companies play an important role in IBMs overall technology offerings because they can fill in with products in areas that IBM no longer plays, the company said. "Start-ups represent a huge innovation and economic engine in the market. Theyre a huge source of partners for our own ecosystems and well as for the industry," Magid said.

It is the third time this year IBM has made efforts to open up access to its patents. In January, it announced open source developers would receive unfettered access to 500 of IBMs patents, and last month it made some of its patents available to developers in the healthcare industry.

IBMs Venture Capital Group takes an unusual approach to venture investing. Instead of investing cash directly in start-ups, the company partners with select venture capital firms and offers their portfolio companies advice, guidance, and access to customers.